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Citing potential conflicts of interest, Dayton moves insurance exchange to budget office

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Gov. Dayton media availability
Gov. Mark Dayton speaks Wednesday, Aug. 15, 2012 at the State Capitol in St. Paul. The governor is changing the leadership of the administration's work on the health care exchange in Minnesota.
MPR Photo/Jennifer Simonson

Gov. Mark Dayton is changing the leadership of the administration's work on a key part of the federal health care law in Minnesota — the insurance exchange.

The governor is shifting the project's oversight from the Department of Commerce to the state Management and Budget office. The move follows complaints that the Commerce Department was too secretive in developing an the health insurance marketplace, and questions of possible conflict of interest for the department.

The Commerce Department has led the effort to develop an insurance exchange that will help more than a million Minnesota consumers find and buy a health plan, starting in 2014. In a letter to state lawmakers, the governor said the Commerce Department has done an excellent job of launching the design and developing the exchange. But MMB is now taking over.

The change will avoid the potential conflict of interest in having the Commerce Department create a health insurance marketplace that the department will eventually regulate, the governor's chief of staff Tina Smith said.

"That was one thing we were thinking about. We were hearing from people who were very engaged in the development process as something we should be very careful about.  And we listened to that," Smith said.

The administration also says MMB has the experience with financial oversight and human resources required for the next phase of designing and developing the exchange.

The move comes at a time when the Department of Commerce, particularly its commissioner and former exchange spokesman Michael Rothman, has been getting a lot of heat over the project.  A coalition of insurance brokers and agents as well as the state's largest business group, the Minnesota Chamber of Commerce have publicly aired their frustration over what they called a lack of transparency from Rothman and his office.

Smith acknowledged the complaints during a conference call, when pressed as to whether the governor's move signals a new level of openness. 

"We're always concerned when we hear people's concerns about lack of transparency and we always try to do better," Smith said. "And we are, that is absolutely our mode of operating, going forward."

MMB commissioner James Schowalter has served under governors of both parties: Dayton, a Democrat and his Republican predecessor Tim Pawlenty. 

The Minnesota Chamber of Commerce welcomes the opportunity to work with Schowalter and MMB, said Kate Johansen Chamber spokesperson.

"Really the Chamber's focus is to continue working with the administration to establish an exchange that provides consumers, and especially small businesses with meaningful information to make educated health care coverage choices," Johansen said.

The governor repeated that no final decisions on the exchange will made until after the Nov. 6 election. That leaves just 10 days before the state must submit a blueprint for its exchange to the federal government. But administration officials say the exchange plan does not have to be finalized by the due date of Nov. 16, but that the state only has to show that it has made significant progress.  Dayton said the goal is to work with the legislature to finalize an exchange for Minnesota in early January.